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Ways To Limit Your Drawdowns In Trading Capital

 


While each of the strategy may not fit into your trading systmen but, some of these rules could help traders limit the drawdowns in their trading capital.
  1. Make protection of capital your number one priority, not your profits. It is much easier to be profitable when you don’t lose a lot of money.
  2. Try not to lose more than 2-3% of your total trading capital on any one trade.
  3. Avoid taking multiple positions that are all closely correlated to the same trend.
  4. Only trade your highest probability entry signals.
  5. Do not become biased as a bull or a bear. Stay open minded to what the markets and your signals are saying about the current trend.
  6. Make sure you don't have more than 2-3 positions open at a time, so even big whipsaws in price action do not damage your account too much.
  7. Only trade markets you are very familiar with, and have done excessive research on with charts and backtests.
  8. Trade only a method you fully understand.
  9. Trade smaller and smaller during losing streaks, and only get back up to full size during winning streaks.
  10. Use option contracts to cap possible maximum losses to only the contract size.
Happy Trading
Multiplier Wealth

2 comments:
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  1. Very energetic blog, I liked that bit. Will there be a part 2?

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  2. I want to to thank you for this excellent read!! I definitely loved every little bit
    of it. I have got you book-marked to look at new things you post…

    ReplyDelete